BBC BLOGS - Peston's Picks
« Previous | Main | Next »

Ireland: The big bail-out is a done deal (almost)

Robert Peston | 09:41 UK time, Thursday, 18 November 2010

Ireland's government is now surrounded.

A woman passes the Department of Finance in Dublin

Its European Union partners want it to accept a substantial rescue loan from the EU and International Monetary Fund - which is likely to include some kind of participation from the UK.

The European Central Bank is urging such a rescue, so that some kind of confidence of commercial lenders can be restored in Ireland's banks - which would help Ireland's banks to begin to repay the £110bn odd they've borrowed in emergency liquidity from the ECB.

Ireland's central bank governor, Patrick Honohan, has this morning said that such a loan, running to tens of billions of euros, is very likely to be accepted.

All of which means that Ireland's taoiseach and finance minister no longer have any room for manoeuvre (some would argue).

Can you imagine circumstances in which the Irish government, whose grip on office is not seen as particularly firm, could go against the urgings and advice of those states and institutions that are the last defence for Ireland against the perception that it is bust?

As I and my colleague Stephanie Flanders have written many times over many months, Ireland has borrowed more than was remotely prudent - some 700% of GDP, when bank debt, state debt, household debt and corporate debt is aggregated.

If Ireland's creditors, many of which have been pulling out their money from Ireland's banks as fast as they can in recent months, are to be reassured that they don't have to demand the rest back - with potentially devastating consequences both for Ireland and the financial integrity of the eurozone - the implicit financial support for Ireland of Germany, France, the UK and other states has to be turned into explicit support. And soon.

Comments

Page 1 of 3

  • Comment number 1.

    Ireland should never have entered the Euro, it has been a complete disaster for them.

    Now they are bullied into a situation where they have no control over their own economy and must mortgage their future to unelected outside control.

  • Comment number 2.

    Ireland should never have borrowed 700% of GDP, it has been a complete disaster for them.

    Now they are bullied into a situation where they have no control over their own economy and must mortgage their future to unelected outside control.

  • Comment number 3.

    So the Celtic tiger was found out to be made of paper IOU's. The Irish government have been made to look foolish or incompetent or both in maintaining that they did not need a bail out. Surely a resignation issue. You can bet the Euro story does not end here. There seems to be a force in the bond markets that can de-stabilise even governments. It seems the whole theory of risk reward for investors is unsustainable.

  • Comment number 4.

    So the deposits are disappearing and the exchange rate is dropping.
    Where are the deposits going?
    Is there any sign yet in Ireland that people and buisnesses are asking to pay and to be paid in sterling?

  • Comment number 5.

    #1 RichYork wrote:

    "Ireland should never have entered the Euro, it has been a complete disaster for them."

    Wrong I am afraid.

    The idea behind your comment, if carried to its logical conclusion, would have every different part of every country operating their own currency. Commerce needs certainty of cost and income to be able to grow and operate efficiently - otherwise all the 'profits' are go to the money changers - the banks. If your model was adopted then the banks would own everything and business, trade and commerce would be crushed. I guess you work for a bank!

  • Comment number 6.

    So the Irish are being forced to take a loan so that the German, English, French and US banks do not loose any of the billions they lent to Ireland.

    What I don't understand is why should Irish tax payers be forced to bail out the international banks.

    Yes the Irish were silly borrowing so much but surely the international banks were pretty dopey in lending them so much. Seems it is only the Irish taxpayer that are now going to suffer. The German, French and US bankers are going to be held harmless.

    Seems a bit unfair to me.

  • Comment number 7.

    PS

    I do not like this tiny box in which we now have to compose our contributions. It is far easier to write and review that which one has written about complex issues in a bigger window!

    Is this small box created by the revised java script system (on Firefox) an attempt to curtail our contributions?

    Is it an attempt by the BBC to curtail our analysis of, and reaction to, the economic developments, or just some techie fiddling?

    Economics and business is not well analysed in 140 characters - it is a multifaceted complex web of considerations and one (at least I need) space to write and review a contribution.

  • Comment number 8.

    6. At 10:18am on 18 Nov 2010, Cassandra wrote:
    "Seems it is only the Irish taxpayer that are now going to suffer. The German, French and US bankers are going to be held harmless.

    Seems a bit unfair to me."

    That is what is happening here and everywhere else so why is it a surprise?

    Anyway, haven't you heard? The bankers had nothing to do with the problems we're in - its all the fault of overpaid civil servants....

  • Comment number 9.

    Well said John. Agree 100%

  • Comment number 10.

    #6. Cassandra wrote:

    "What I don't understand is why should Irish tax payers be forced to bail out the international banks. "

    Don't you!

    The Irish 'problem' is a microcosm of the UK's problem - our problem is proportionately a far larger (per head of the population). Our banks have yet to even start taking onto the balance sheets the dramatic write down caused by our huge overvaluation of property.

    If the Irish are bust we are double bust!

  • Comment number 11.

    Again Mr Peston tends to ignore that it was the institutions usual BBC euphamisms for speculators and investors that caused the problem - it only takes maybe 3 seconds to mention this

  • Comment number 12.

    5

    How do you think that Ireland would have been able to borrow this sort of money without joining the Euro?

    Like Greece this gave them access to riches beyond the dreams of avarice. It is always the case that governments will spend as much as they can get away with.

    This wasn't just predictable, it was also widely predicted.

  • Comment number 13.

    The day Ireland signs this loan agreement is the day that Ireland has to accept that it is no longer a sovereign, independent country in any meaningful sense of the word.

    From independence in 1921 to a state of bankruptcy and becoming a puppet state of their EU creditors has taken Ireland 89 years. Very sad.

    Has it not occurred to the Irish Govt that default could be a far better option?

  • Comment number 14.

    This is going from bad to worse for the Irish government and the people. It sounds as though the Irish Government are prepared to stand back while Ireland sinks below its own debt.

    They will now have to face the harsh realities of life and accept the bail-out from the EU.

    If Ireland wants to remain a member of the Eurozone countries and participate in the single currency, it will have to accept that European Commission and the IMF going through their finances in Dublin.

    Otherwise the rest of the world will think that they have something to hide.

  • Comment number 15.

    Banks are profitable again - why not let them take the hit?

    The one piece of actual work in the lending decision is to do credit analysis and then decide whether it's a decent deal. If governments are going to underwrite every loan in every jurisdiction anyway then why bother with banks and the government could just hand out money willy nilly and cut out the middle man?!

    An exciting new take on capitalism I think.

  • Comment number 16.

    The Celtic tiger always seemed a bit Icelandic to me. Just goes to show what a complex mix of finance, politics, history and nationalism life can throw up. Ideally, I'd use this as an opportunity to get the Irish to put up their low corporation tax rates which, currently, pull business into Dublin etc from countries many of whom will ultimately be paying for the Irish bailout. Maybe English guilt means its pain we have to bear.

  • Comment number 17.

    7. At 10:25am on 18 Nov 2010, John_from_Hendon wrote:
    Is it an attempt by the BBC to curtail our analysis of, and reaction to, the economic developments, or just some techie fiddling?
    ------------------------------------------------------------------------

    http://www.bbc.co.uk/blogs/bbcinternet/2010/11/changes_to_comments_on_bbc_int.html

    I expect this will not appear as a clickable link as that function seems to have gone (surely an error?).

  • Comment number 18.

    But RichYork @12 that is my point.

    If this was all so predictable why did these smart international financiers lend Ireland so much money?

    And why should they not suffer just a bit for their stupidity?

  • Comment number 19.

    13. At 10:33am on 18 Nov 2010, busby2 wrote:
    "Has it not occurred to the Irish Govt that default could be a far better option?"

    The bail out means the Irish taxpayers lose out - if Ireland default who would lose out then?

  • Comment number 20.

    RP Wrote "Can you imagine circumstances in which the Irish government, whose grip on office is not seen as particularly firm, could go against the urgings and advice of those states and institutions that are the last defence for Ireland against the perception that it is bust?"

    I suppose it depends on who is doing the urging, what their ultimate aims are, and what strings/chains are attached to the bailout.
    If there are no strings attached and the ECB and European partners genuienly want to help Ireland then they would be foolish not to go for it.
    However if it means digging a bottomless financial hole which the Irish can never escape from then I would say don't take the money, at least not until the terms are more favourable.

    It's a game of poker with the highest stakes, and I think the European Union will blink first because it has more to lose than Ireland.

  • Comment number 21.

    #7 John_from_hendon wrote:

    " PS

    I do not like this tiny box in which we now have to compose our contributions. It is far easier to write and review that which one has written about complex issues in a bigger window! "

    Use notepad to compose your text, then copy and paste your message from notepad into the bbc box

  • Comment number 22.

    The question is therefore, how do they intend to bail Ireland out?
    Do they intend to give it money, which is a bailout.
    Or
    Do they intend to lend it money, which is not a bailout.

    Pound to a penny it’s just another loan.
    Which will be followed by calls to sell off assets to pay for it.

    For a good description of ‘austerity and a bailout’ see link below:
    http://www.youtube.com/watch?v=jUmQbf1AyA8&feature=related

  • Comment number 23.

    Sad,more debt to pay debts. When you bail out a boat, the water still comes in and unless you struggle harder and harder the boat will eventually sink. The hole needs to be fixed. They are going to need a hell of lot of buckets to keep Ireland afloat for the next few generations.

  • Comment number 24.

    I wonder if Robert could answer whether NAMA, the 'bad bank' set up by the Irish Government will continue or whether it has now been overtaken by events and will become obsolete?

  • Comment number 25.


    It seems long ago that it became apparent that the banks had borrowed so much against an ever-rising property market that they were about to go bust.

    Government's thought they had learned the lessons of the Great Depression, and, to prevent a systemic meltdown they stepped in and bailed out the banks.

    The lesson this time around, appears to be that the banks had borrowed enough to bankrupt not only themselves but also the Government's bailing them out. (A lesson too late for the learning - maybe next time....) Who knows, when it is all counted it may be enough to bankrupt the Governments that are now bailing out other Governments.

    In any event, the whole process is one of trying to prevent the debt mountain collapsing by passing the debt on and up to more credible debtors (and in the case of tuition fees to young people not yet indebted). In the process, we are allowing the bond markets to dictate policy and extract ever larger sums from the taxpayer to cover their losses.

    As this unfolds, I begin to think that we would have been better off letting the banks go under in the first place - and invested our time and money in protecting people from the fallout. We also might ponder whether we would be better off now if we let Ireland, Greece et al default - thereby letting the losses fall with the lenders and not with the taxpayers. OK, you might say, but the lenders are those same bank that we don't want to fail. If so, I would refer you to the first sentence of this paragraph.



  • Comment number 26.

    @12
    It wouldn't matter if Ireland's currency was the euro or the dollar or the rouble . The fault still lies with the government which failed to control the banks and the speculators . And if you think I am wrong , tell me how you can justify Iceland , which had nothing to do with the euro .

  • Comment number 27.

    Once again, professional investors are being 'made whole', despite their reckless investments.

    What happened to 'your investment can down down as well as up'?

    Next to Portugal, then Spain, then Italy - this is going to be an agonizing and long-drawn out death.

  • Comment number 28.

    Ireland must also now regret its handling by its politicians of its wheeling and dealing over the Lisbon Treaty ... which has probably taken away not only its own remaining sovereignty but that of the UK and other EU states also ... by removing any prospect of a referendum on the Treaty as promised by Blair and Brown to the UK taxpayer ... but reneged on in the most disgraceful fashion.

    Being a member of the EU is one thing .. having zero sovereignty within the EU is quite another.

    Ireland has one card left ... it can leave the EU and set up its own currency and say to the EU ... your EU currency problems are your own!

  • Comment number 29.

    It seems to me, that when ever an organisation gets large, it gets arrogant, and not necessarily cleverer. So the EU let members do things they shouldn't, deny there was a problem, and now look after their own (well the larger members of course) without accepting blame, or letting there be powerful casualties. (big companies)

    We get the society or situation our predecessors deserve, and it is so sad, each of the big bank people, the government people who made the crass decisions nearly always get rewarded, patted on the back, move on and then it is mostly innocent new people who have to deal with the consequences. I guess it was always so.

    However, do these new people own up? Not really, they too are arrogant and know best. Remember the phrase "the failure of the Euro, could mean the failure of the EU" If that isn't scare mongering, then I don't know what is.

    Perhaps all these very clever EU people need to consider perhaps this empire they have built is not perfect, perhaps one set exchange rate is a bit stupid, perhaps if the accounts are not signed off over years, there is a reason. Perhaps it isn't spending well or setting a good example, perhaps it is top heavy.

    I rarely find bigger is better. Bigger is usually more arrogant and it just takes longer to find out they didn't know what they were really doing.

    Perhaps Ireland should default, perhaps it should let consequences pan out, as if the EU is not changing or learning on its own, then maybe events need to force it to.

  • Comment number 30.

    1) The banks lend recklessly to Ireland and within the country
    2) The Irish Governemnt bails the banks out at taxpayer expense
    3) The banks then 'Lose confidence' in Irish state finance and raise the interest on loans, loans needed to bail out..the banks
    4) The rest of Europe has to pitch in at taxpayer expense and the banks that made the reckless loans get their money back with added interest

    Magic

  • Comment number 31.

    This is essentially a coup d'etat for the Irish Government. The control of the country's finances have been seized away from the elected government.

    How will the Irish people react to their economy now being controlled in Brussels?

  • Comment number 32.

    "As I and my colleague Stephanie Flanders have written many times over many months, Ireland has borrowed more than was remotely prudent - some 700% of GDP, when bank debt, state debt, household debt and corporate debt is aggregated."

    I keep coming back to this:
    How could they borrow more than was remotely prudent? What does this say about the professional competence of those approving the loans? With that track record, why are those who made the loans rewarding themselves with large bonuses, and keeping a straight face while telling the rest of us that they must pay these to keep the most talented staff? What has changed, to prevent these people wrecking the economy again?

  • Comment number 33.

    The Irish should abandon the Euro get the money off the IMF and join the Sterling pact . Greece Spain and Portugal can join too.

    The union will be based on free trade and working together for a common good while still maintaining sovereign state and customs.....

  • Comment number 34.

    This report is farcical and deceptive. The huge headline is "BAIL-OUT" when the reality is "LOAN". The points you make is that Ireland will be forced to give up its resistance to a bail-out when in fact no such thing is happening. Ireland is accepting a loan at favourable rates in order to have a buffer, and to restore market confidence.

    nondenom:
    Force Ireland's corporate rate up and Ireland loses the ability to pay back any of its loans. Ireland defaulting would put Britain's banks at huge risk. This is one of the reason that Osbourne is saying that it is Britain's interest to ensure the viability of Ireland's efforts to restart its economy.

    I am appalled at the way this has been reported in the BBC.

  • Comment number 35.

    no.18
    If this was all so predictable why did these smart international financiers lend Ireland so much money?

    And bankers are smart?
    Big bonuses do not make smart business practice as these last few years have shown. And are the bankers still to be trusted? And of this scheme seems to me just to generate interest payments for the banks profits on a loan that will fail.
    Or am I wrong here?

  • Comment number 36.

    Lets see now.
    The People controlling the sell off in the Bond markets would be the Hedge Fund friends of the Bankers.
    So, why create a crisis ?

  • Comment number 37.

    21***

    Your a Genius..

    JFH I am surprised you did n't think of that yourself.

  • Comment number 38.

    I must admit to being more than a little confused (once again) - is this issue not once again one of the banks over-extending credit in a perilously over-inflated property market, not being able to secure their exposure, and subsequently the Irish government borrowing huge sums of money to provide that security by injecting it into the banks? And isn't any money injected by the UK or the Eurozone going to be used in exactly the same way?

    I'm genuinely amazed that banks as private companies are able to hold what is now effectively an entire continent to ransom. You'd think I'd be numb to it by now. As pointed out, in a bail out the taxpayers (yes, that will include us as well as the Irish if we decide to extend further credit) will have to suffer, the banks will suffer adverse share prices and losses for a year, maybe two tops, then return to obscene profits shortly after, none-the-wiser.

    What does actually happen in the seemingly 'unfathomable' situation of default? It seems to me that Ireland's meagre GDP is not sufficient to even contemplate the interest on the money it currently owes, yet alone any consideration of paying off further debt saddled by the Eurozone/UK.

    I think I'm likely to remain confused for the next decade, at least.

  • Comment number 39.

    Think about the logic folks - just think about it.

    The Germans (mainly) are bailing out the Irish, so the Irish Economy doesn't go into decline - which could affect German exports and injure their own economic recovery.

    If you ran a shop, would you be lending your broke customers money so they could spend it in your shop? How long could this go on for - and what is the benefit?

    It may look like business is still running, but actually you're simply recycling your own money - this is basically what the EU are doing.

    Now we already have Greece and now Ireland playing this mad game - when the others join in (which they are bound to as it's the easier way out politically) what do you think is going to happen?

    Greece is still in decline, so the chances of paying back the loan are diminishing - now when they run out - the Germans (EU) will have to decide to cut their huge losses - or pile in with more cash.

    There is no incentive for Greece or Ireland to rectify their problems - because now the bailout has been called - the EU cannot afford not to bailout. Eventually it will collapse in a heap of ever increasing debt - a problem further exasperated by the austerity measures in Greece and Ireland - which are declining the tax take and causing social unrest - both of which impede the chances of paying this all back.

    It's like taking that loan from the shopkeeper - but he insisting you take a 3 day a week job instead of the 5 day a week one you were doing.

    ...and still the capitalists insist this is the right thing to do - my god people you need to wake up, bailing out didn't work with the banks and it's not going to work with nations either - at some point the wheels will come off - or do we think the ultimate bailout is when a cloud parts in the sky and a giant hand reaches down and hands us the ultimate bailout???

    ...and unlike the common belief of the capitalist - none of this is happening in isolation. The result of this crisis of the Euro is pushing it down - good for German exports and good for Greece, however the other side of this coin is this is bad for Chinese exports and more importantly US exports.

    What will the US do? - well the only thing they can, QE3 and protectionism to protect their export market.

    Imagine a tray of water, and you''re trying to carry it across an assault course with objects being thrown at you - "it's a knockout" style.
    If you've ever carried a tray of water you will be aware that once the sloshing starts it produces motion which is dificult to control - you can correct it by correcting the tilt in response to each wave - but this generally causes bigger waves and less control - and then everntually one over correction too many and it all spills over - total loss of control.

    ...that is the world Economy at the moment - and the press are too busy gushing over some wedding to see the impending disaster.

    Once Irish bond holders have been promised their bailout - they'll start on Portugal and Italy next - why? well would you pass up an opportunity to have your loan guaranteed by Germany - but unlike the Bund you're getting paid 7% more for what amounts to the same risk of default (once they're bailed out)

    ...and if you're a clever bond holder you'll be getting out before the EU loan expires, taking your profit from the situation before it collapses - like they are with Greece. For all the bailout - their cost of borrowing (should they return to the market) is now higher than ever!

    "The yield on the Greek 10-year sovereign widened to 11.280 percent from 11.184 percent after the government admitted it was in breach of conditions for a new instalment of a 110-billion-euro IMF-EU bailout."

    http://news.yahoo.com/s/afp/20101115/bs_afp/eueurozoneirelandfinancebondspublicdebt

    Looks like bailouts are merely postponements of default - what a shame the sheeple like to listen to those with vested interests in these matters rather than those of us without them.

  • Comment number 40.

    Ultimately Ireland is a bit like Iceland but with a property boom rather than a corporate finance led delusion.

    Ireland messed up by promising to pay off all the bank creditors rather than merely depositors.

    The bail out will only delay the inevitable (as Greece seems to be finding out). Ireland needs to renege on its promises to support the bank creditors other than depositors. Ireland should then deal with its banking system but transferring all assets and deposits to a good bank leaving everyone else in the bad banks and say the good bank will pay 60% of profits to bad bank. Then they sure hire in someone to run the good bank and walk away from the bad bank.

    Yes it is harsh but and in effective it will result in a massive write off of Irish bank debt but the alternatives are much worse

  • Comment number 41.

    You just broke free of British influence and now you are to become a Franco German subsidiary. Sorry for you chaps but the writing was on the wall the day you signed up to be a good, unquestioning Euro puppet. Did you think all years of Euro cash came over to you with no strings attached? You gave up a bit and lost it all.

  • Comment number 42.

    @ At 10:05am on 18 Nov 2010, RichYork wrote:

    > Ireland should never have entered the Euro, it has been a complete disaster for them.

    This post remind me of that joke about a tourist in Ireland who stops in a small town and asks one of the locals for directions to Dublin. The Irishman replies: ‘Well sir, if I were you, I wouldn’t start from here’. I can tell that joke, because I'm a catholic Celt myself, born right next to the Irish Sea.

    Look, Ireland is in the state it's in, and the focus must be on the best strategy now. Unless we want endless repetitions of incompetence and fraud, we have to castigate the perps this time around, i.e. right now. That means stripping down the banking chumps who caused this mayhem. That makes moral hazard, and future generations of the "get rich quick" brigade will know what's in store for them if/when they foul up.

  • Comment number 43.

    Robert post 12 raise a good point about Iceland , one of the worst countries for borrowing money it could never repay. Surely one worth a piece on they are going on .

    (I know they still owe the UK a shed of cash by not honouring they deposit schemes.)

  • Comment number 44.

    26. At 10:52am on 18 Nov 2010, aegean ghost wrote:

    "@12
    It wouldn't matter if Ireland's currency was the euro or the dollar or the rouble . The fault still lies with the government which failed to control the banks and the speculators . And if you think I am wrong , tell me how you can justify Iceland , which had nothing to do with the euro ."

    Failed to control? - yes, if banks and sepculators were children, clearly you think they are as they have no element of responsibility in your world.

    I do love this defence of the banks - well of course it was the Governments fault - they should have been watching these banks.

    Are these banks the enemy within then? - should we be treating them as such? I mean it seems to me that this is a contradictory line, the banks say rules and regulations will impede business and any such threat will have them leave these shores - and yet the claim is our Government (which has other things to do) should devote it's time to monitoring these banks?

    Absolute madness - when that is the position, you are suggesting madness.

    "Sorry officer for breaking that window - but it was YOUR fault for not monitoring my bad behaviour correctly"

    What a hypocriscy - and some people seem comfortable with that - what a shame it doesn't apply to every level.

  • Comment number 45.

    I think flaw in all this is that the "bale out" is being financed fromother irresponsible borrowing.

  • Comment number 46.

    Thankyou France et al
    Alan
    Istanbul
    PS This is a cryptic message but don't worry.

  • Comment number 47.

    Ireland was always orientated towards Europe. In the past, many European countries including; France, Germany, and Spain, sent military aid to Ireland in the many uprisings against the British Empire, Ireland will never forget this fact. The present problem originates in the relationship between the Fianna Fail Party and 'The Construction Industry' .. ! ..There have been many scandals in this area starting with 'The Charley Haughey Era'.. This branch of the Irish Economy always gave the biggest donations to the Fianna Fail Party .. ! .. Planning Permissions were therefore easy to obtain from Fianna Fail, leading to a glut in new buildings. . The Irish then felt wealthy - selling houses to each other .. !.. The Irish Economy was built on a property bubble.

  • Comment number 48.

    I would be interested to know what this means in real terms for an Irish tax payer. All these billions means nothing, we need it expressed as "each standard rate tax payer will have an extra x Euros to pay each year for the next 20 years".

    #7 John... in my browser, Google Chrome, I can drag the bottom corner of this comment box and make it as large as I want. Not tried Firefox, gave up on it when I found out how much quicker Chrome was.

  • Comment number 49.

    35. At 11:03am on 18 Nov 2010, barry white wrote:
    "And bankers are smart?
    Big bonuses do not make smart business practice as these last few years have shown. And are the bankers still to be trusted? And of this scheme seems to me just to generate interest payments for the banks profits on a loan that will fail.
    Or am I wrong here?"

    Bankers have made huge fortunes out of this and someone else is going to pick up the bill.

    Sounds smart to me...

  • Comment number 50.

    The greed of ordinary people are to blame, thinking they can live beyond their means by indebting themselves more and more. Who here is not guilty of that.

    One thing that will not change is that genuinely rich city people will still be driving around in expensive cars and living in big houses.

  • Comment number 51.

    In fact Ireland was very sensible in joining the Euro. It helped the economy grow at a dramatic rate for seven or eight years. Rather than the Punt being linked to ever declining Sterling as it was for 50 years the IR£ and economy benefitted from strong ties with mainland Europe. The current problems, and who knows if the UK£ is secure, are a temporary blip.

  • Comment number 52.

    Ireland owes £81.6 Billion to just 2 British banks,RBS and LLoyds,this equals £18,300.36 for every man,woman and child in Irelands population of 4,457,863 .This is just 2 banks.Now the UK is making a contribution to the bailout.So they still owe the original balance,the UK taxpayer is paying the interest on the original debt and now we are giving them money to pay the interest as well.In the meantime we are loosing jobs and public services for years to come.The Euro is finished with Portugal,Spain and Italy yet to default,more bailouts coming up.The banks were private concerns who eventually thought they could do what they wanted and simply insure against loss,Risk is the nature of banking and should be kept in check by Regulators and Politicians neither of which are currently in jail for breaking the country.The whole story is one of systematic fraud and financial breakdown (meltdown) the ultimate cost to be paid by unborn generations who will be debt slaves not only to their own nations debts but other nations debts as well.Banks too big to fail,loans too big to fail,politicians and bankers believing the system will return to normal,well the big news is the days of mass consumerism are over,the bankrupt system will not return to normal for decades if ever.There are 2 possibilities,hyperinflation and default.Hyperinflation where the debts are reduced to nothing as the currency collapses or outright default,either one looks imminent the way the lack of a functioning economy is playing out.As Bankers try to destroy the Gold and Silver prices as an alternative to paper printed debt in ever increasing quantities.The price of Gold and Silver hasn,t increased in real terms,the real value of financial Assets has collapsed.What the Politicians and the Central Bankers have yet to understand and act on is that the current financial system is in a death spiral and printing more cash to pay ever increasing debts won,t halt this.The first nations to properly default will gain control of their own destiny and have a head start in the future.We haven,t the common sense to do this and the truth is hidden from the general public.
    Paying other nations debts is a National Disgrace,has this nation learned nothing since WW2.

  • Comment number 53.

    Of course the EU is keen for Ireland to accept the bailout as it allows fiscal conditions to be forced upon it that allow for the single taxation structure that has always been at the heart of this Franco/German axis. Lull them in with economic intregration, finish them off with political intregration. Goodbye Ireland.

  • Comment number 54.

    #47
    Fianna Failed - love it.
    A wedding needed methinks

  • Comment number 55.

    Does this mean Ireland has lost its independence after 89 years?

  • Comment number 56.

    Well it seems that austerity served Eire well if it has now come to this.

    Slightly off topic, but are the natives getting restless with the MSM http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/media/8141993/James-Murdoch-block-News-Corp-and-well-go-abroad.html
    Judging by the handfuls of comments here, i'd say yes.

  • Comment number 57.

    The structure of Monetary Union essentially creates this whole scenario. The aims of Monetary union are to ease travel of citizens and goods, eliminate exchange rate problems, provide price transparency, create a single financial market, price stability and low interest rates, and provide a currency used internationally and protected against shocks by the large amount of internal trade within the eurozone.
    The reality is that the means by which the ECB regulates the single currency is primarily by interest rates. A policy that has deliberately kept interest rates low for the last 11 years in order to stimulate German and Euro core growth through a period of relative stagnation in the early to mid 2000s was absolutely unfit for a country like Ireland. It is not a surprise that the PIGs were driving a lot of additional growth prior to the crash in 2008. They were basking in an inappropriate interest rate.

    http://www.ecb.eu/stats/monetary/rates/html/index.en.html

    As precisely the point where someone should have taken away the punch bowl, Trichet was busy pouring Vodka into the mix in order pump prime the Euro core.

    The economies are not converging naturally, so along comes a market adjustment where in reality a lot of Banks ought to go out of business having over exposed themselves. The problem is that the ECB is now trying to mitigate this because of the exposure being north of $140 bn. The simplest thing it could have done would have been to run a interest rate that would have hacked back growth 5 years ago. It didn't. Attempting to now facilitate convergance by essentially forcing an economic policy on Ireland (for example aligning Corporate Tax rates) may gradually reduce this happening again in the future, but is explicitly saying that convergance *with Eurocore/German growth rates* is now a stated objective of the ECB.

    An historical convergance of a similar magnitude was achieved after the currency union in the States after the Civil War. The outcome was economic collapse for the south until Rooseveldt's era 70 years later. Not suggesting the outcome will be similar but you could make a strong argument for saying the Euro is functioning as designed and this isn't a crisis whatsoever.

  • Comment number 58.

    Was it Denis McShane who appeared on our TV every day for several years spouting the wonders of the UK joining the Euro? Backed by politicians of all hues.

    We should be thankful to the so called 'little-Englanders' who have kept us out of this mess by applying pressure to government not join. I dread to think how badly we would be suffering had we joined.

  • Comment number 59.

    Diom @ 34. Does it really matter?

    As I understand it the Irish taxpayers are taking a loan so that the Irish Banks have the resources to pay back the monies lent to them by German, UK, US and UK Banks.

    So the EU and the IMF are advancing monies to Ireland to "bailout" the international banks. Without the loan the international banks wwould have to take a haircut.

  • Comment number 60.

    Lets calm down,please. This is being ramped up to the point that readers might feel relieved that UK taxpayers should shoulder billions for Ireland's banks. From what I understand, the ECB are calling the shots by wanting their liquidity lifeboats to Irish banks reduced and repaid. The issue here is whether the UK should be refinancing the Eurozone's central bank's support operations to its affiliated banking sectors. Should we? If so, why? Will the ECB be prepared to refinance Bank of ENgland operations in support of UK banks?

  • Comment number 61.

    Ireland joined the Euro so that it could benefit from much cheaper borrowing.

    It got what it wished for - in spades.

    Just like Greece it binged on cheap money, only to find out after the party it had an almighty hangover of massive debt.

    Now the whole Euro edifice is about to topple - so debt is now being passed around like some version of musical chairs in an effort to keep the whole thing going.

    The only question is who will be the first to fall flat on the floor?

  • Comment number 62.

    "As I and my colleague Stephanie Flanders have written many times over many months, Ireland has borrowed more than was remotely prudent - some 700% of GDP, when bank debt, state debt, household debt and corporate debt is aggregated."

    So another masive piece of capital allocated. Or though it is the only thing to do. Two things it means that banks are going to be less likly to lend money so house prices will continue on there way down and (tongue in cheek)maybe we should invite Ireland back into the UK!(afterall we appear to own most of it!!!)


  • Comment number 63.

    "5. At 10:17am on 18 Nov 2010, John_from_Hendon wrote:
    #1 RichYork wrote:

    "Ireland should never have entered the Euro, it has been a complete disaster for them."

    Wrong I am afraid.

    The idea behind your comment, if carried to its logical conclusion, would have every different part of every country operating their own currency. Commerce needs certainty of cost and income to be able to grow and operate efficiently - otherwise all the 'profits' are go to the money changers - the banks. If your model was adopted then the banks would own everything and business, trade and commerce would be crushed. I guess you work for a bank!"


    So you're argument is that the national (or even regional) currency idea, one that has worked for the last 4,000 years or so, is far less stable to the Euro - a currency enforced on a dozen or so nations in the last decade and which looks like collapsing in the near future destroying the economies of all countries involved, and dragging the rest of us into a second global recession?

    Ever thought about becoming an MP/MEP?

  • Comment number 64.

    As far as I can tell this is just more of the burden being pushed onto taxpayers. Heaven forfend that anyone in the financial sector should ever have to take their share of the pain on the form of a 'hair-cut'. No, it is privatised profits but socialised losses all the way, every time.
    The taxpayer has always been on the hook but where is the promised regulation that is supposed to stop this all happening again? The Council of Mortgage Lenders is busy as we speak trying to get the FSA to water down its new mortgage lending criteria. Slowly bit by bit we are being edged back to the bad old days by the financial services industry because they know we're always going to bail them out. What is all this costing us?

  • Comment number 65.

    Is ''Punt'' an Irish way of saying ''Pound''??
    Thankyou again to those far seeing French and Austrians for not looking any further east than Sofia. End of cryptic messages

  • Comment number 66.

    The Euro was/is doomed to failure from the beginning...it should never have been set up without the appropriate authority to control it [like the Fed in the US, or the Bank of England].
    The only solution I see is to disband it and start again with a very much more powerful European Central Bank.
    But is Europe ready for that politically? I think not. Which is why the Euro should never have been 'imposed' in the first place.
    It don't look good! Best to acknowledge a mistake and try again, if at all, with just the strongest 4-5 economies. Then let the others [Spain, Italy, Greece etc] join as and when they prove to be equally strong.

  • Comment number 67.

    34. At 11:03am on 18 Nov 2010, diom1982 wrote:

    "I am appalled at the way this has been reported in the BBC."

    I'm appaled that you think a LOAN will 'restore market confidence' and solve the problem.
    ...I'd say that you were keen on seeing a recovery and no amount of truth is going to get in the way of that belief (unless I mis-understand your complaint)

  • Comment number 68.

    Is this a good time to buy Allied Irish or Bank of Ireland Shares?

  • Comment number 69.

    4. At 10:16am on 18 Nov 2010, Morpheus wrote:

    Is there any sign yet in Ireland that people and buisnesses are asking to pay and to be paid in sterling?
    ---------------
    What a stupid comment. As far as I can see the pound is hovering near its all time low of 1.1 Euro, after it dropped from 1.5 Euro in 2008, losing almost 30% of its value. Don't you remember that your holiday in Euroland has become much more expensive?

  • Comment number 70.

    38. At 11:06am on 18 Nov 2010, Turbulent_Times wrote:

    "I'm genuinely amazed that banks as private companies are able to hold what is now effectively an entire continent to ransom."

    Amazed - really?

    Did people not think that free market capitalism - which encourages the accumulation of capital - wouldn't result in corporations holding more capital than sovereign nations and therefore their failures being so great to bring down those nations?

    I can't believe that people are surprised by this - what did you thin was going to happen? All the successful corporations would fold quietly and their 'fitter, younger and more efficient' competitiors take their place?
    What a load of old nonsense, the ideas of Free market Capitalism are failed - apart from blaming the Government the free market simply doesn't recognise that giant corporations will be the inevitable result of capital accumulation being the goal of everyone.
    ....and they suggested this would be hand in hand with (economic) freedom - oh dear, what a lot of mugs the sheeple have been - and now they're going to pay dearly. This was always going to happen, it's merely followed the logical course - but some fruits wanted to belief self interested people like Friedman instead - well I hope you're all happy in your misery of debt - because you didn't read the small print before you climbed aboard this gravy train.

    "And they said, Go to, let us build us a city and a tower, whose top may reach unto heaven; and let us make us a name, lest we be scattered abroad upon the face of the whole earth. And the Lord came down to see the city and the tower, which the children built. And the Lord said, Behold, the people is one, and they have all one language (of money); and this they begin to do; and now nothing will be restrained from them, which they have imagined to do. Go to, let us go down, and there confound their language, that they may not understand one another's speech. So the Lord scattered them abroad from thence upon the face of all the earth: and they left off to build the city. Therefore is the name of it called Babel; because the Lord did there confound the language of all the earth: and from thence did the Lord scatter them abroad upon the face of all the earth."

  • Comment number 71.

    4. At 10:16am on 18 Nov 2010, Morpheus wrote:

    Is there any sign yet in Ireland that people and buisnesses are asking to pay and to be paid in sterling?
    ---------------
    What a stupid comment. As far as I can see the pound is hovering near its all time low of 1.1 Euro, after it dropped from 1.5 Euro in 2008, losing almost 30% of its value. Don't you remember that your holiday in Euroland has become much more expensive?

    -------------------------------------------------------

    Hardly stupid, reducing the value of your currency is a way to increase exports and so improve finances and lower debt.

    All this concern with international banking and complex financial instruments has led to a real belief in some that we can solve things by moving money around instead of producing real goods and services and exporting them to improve our own economies. The Irish took the EU shilling and will pay for a long time to come but their ability to bounce back would surely be enhanced if they could get out of the Euro, at some point, and control their own destiny again.

  • Comment number 72.

    56. At 11:32am on 18 Nov 2010, Bim Sherman wrote:

    "Slightly off topic, but are the natives getting restless with the MSM http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/media/8141993/James-Murdoch-block-News-Corp-and-well-go-abroad.html
    Judging by the handfuls of comments here, i'd say yes."

    Ah yes - good old free market capitalism at work - agree to my demands or I shall remove the wealth I am currently storing in your country.

    ....economic freedom? - where are the free market Capitalists to explain this? How is this freedom? - and no, you can't blame the Government because this time they're actually trying to regulate the problem - and surprisingly that's not going to work either.

    We are all slaves - it's time you all realised that. You have no economic freedom, your pensions are destroyed, your welfare state is being removed and it still won't stop us having to be bailed out by the IMF ponzi scheme anyway. The corporations have their economic freedom - but the sheeple missed out on that one - we're too busy paying for their freedom.

  • Comment number 73.

    Some people are dismissing the Celtic Tiger as a myth, it was very real but it only existed from 1990 to around 2000. Ireland's initial success was based on attracting multinational high tech firms like Intel and Dell to set up manufacturing plants that saw the initial surge in growth. This was good solid development based on actually making things and creating wealth.

    It all atarted going wrong after Bertie "I haven't got a bank account!" Ahern became Taoiseach in 1997 and immediately began implementing policies to benefit his property developer friends. This caused the property bubble to develop which in turn pushed up house prices, which in turn saw growth in wages, prices also began to grow at an unsustainable rate, (a pint in Dublin could cost you up to 6 Euro!) this made the economy uncompetitive and many of the firms who helped create the Tiger went to cheaper places in Eastern Europe. The property boom was based on dubious and possibly illegal loans from Anglo-Irish Bank and Irish Nationwide to "Godlen Circles" of developers, the full truth of this has yet to emerge and if it does I suspect many people will go to jail. It was based entirely on speculative borrowing investing in paper assets made possible by an unsuitably low interest rate, the anthithesis of what happened in the Celtic Tiger. Even without control over interest rates the government could have used property taxes, planning controls and financial regulation to cool the boom but that wouldn't have gone down well in the Galway Tent!

    The moral of the story is to conccentrate on making things and not gspend your money on candy floss assets like property. Had Ireland just stuck to the original plan that gave birth to the Tiger it wouldn't be in it's current mess.

  • Comment number 74.

    58. At 11:35am on 18 Nov 2010, RichYork wrote:

    "We should be thankful to the so called 'little-Englanders' who have kept us out of this mess by applying pressure to government not join. I dread to think how badly we would be suffering had we joined."


    ...and you think we're in a better position? - Oh how it must be reassuring that in the sea we're the ones about 10ft closer to the land than the other survivors - it's just a shame the coast is 2 miles away making the 10ft insignificant.

    We'll see how much you're crowing when currency debasement makes the UK dive into stagflation due to it's high import dependency.

    ...but of course by the time that can no longer be kept secret one of the corgi's will be getting married and nobody will notice.

  • Comment number 75.

    60. At 11:36am on 18 Nov 2010, shireblogger wrote:

    "Lets calm down,please."

    yes - we should all calm down, I mean it's only a crisis which has been running for 2 years without any sign of ending isn't it?

    What's the panic all about? - we must trust in our leaders, we must trust in our leaders, we must trust in our leaders.....

  • Comment number 76.

    There is a lot of talk about whether the bailout would happen, and now we've moved on to how much, but the really interesting question is what is it going to be used for? In general, we know the need is to strengthen the domestic banking system. As an aside, Ireland does not really have a public sector fiscal problem. Exclude the support required for the banks and the public finances are in better shape than many other countries. Painful adjustments would still be necessary, but they would be manageable. Understanding that is key to the politics behind Cowen and Lenihan claiming Ireland doesn't need a bailout and they won't ask for one. Their clear objective is to be able to pin all this on recklessness in the banking sector, which they hope will provide at least a little cover for Fianna Fail in the now inevitable election early next year. We'll gloss over the fact that Cowen was Finance Minister for all of the period of banking excess. Shades of G Brown!!!

    The more pertinent issue is why do the banks need all this extra support? NAMA allegedly removed all of the problem construction/development loans off the banks, and the government injected capital into the banks to cover the losses that were crystallised as a result. So where is the problem now?

    Anyone who has read Prof Morgan Kelly's Irish Times article from last week will know the answer to this. The next big hit to bank balance sheets is losses on residential mortgages. The interesting question is precisely how these losses will crystallise. The level of non-performing loans is, apparently, already at very high levels, possibly 100,000 out of total mortgages of about 700,000. The level of potential loss to the banks on a per loan basis is also very high, given the overheated nature of the housing market in the early years of this decade plus the fall in house values over the last 3 years. House prices in Ireland are down at least 50%, not that it's easy to verify this as there are so few transactions right now. The point to note, though, is that the level of negative equity is very high, not just the number of borrowers in distress.

    So, there is not much appetite in the banks to reposess homes. Doing so just crystallises large losses, not to mention holding costs as reposessed properties will need to be maintained until sale. The average time to sell a property in Ireland right now is over 8 months. Prices and sale times are further being distorted (downwards) by an apparent NAMA policy of selling off unoccupied new properties for whatever they will fetch. There are a number of such developments near where I live, all of which have suddenly started marketing again since NAMA took ownership. Prices are roughly 50% of the level of earlier phases released in 2006-2007. This would fit in with the loan discounts we're told NAMA took when acquiring the loans. In other words, NAMA should be covering its own borrowings at these price.

    So we appear to have a situation in Ireland where large (and increasing) numbers of people cannot afford their mortgage payments, severe notional losses of value on residential property that will crystallise if the banks repossess, a broken banking system as a result, and the position about to get worse as further tax increases in the December budget reduce disposable income and the ability to finance mortgage obligations. And the reason these tax rises are needed is, primarily, to fund the cost of writing off the loans associated with property development. In other words, the household sector is being driven deeper into debt/insolvency in order to write off the debts of the commercial sector.

    Politically, and I suspect economically, there is going to have to be a debt forgiveness program to dig the household sector out of this hole. Normally such a program would be political madness: the "prudent" majority would object to bailing out the "imprudent" minority. In Ireland, however, those in distress now probably constitute a majority. And those that are not in distress are, in general, probably of an older generation who very probably now have children in a distressed position. In other words, debt forgiveness is probably a net vote winner here. All that's missing now is the financial ability to pay for it.

    Cue the EUSF, and its recapitalisation of bank balance sheets to give them capacity to take these write offs. Iceland is going through this very exercise now, via an IMF overseen process. My money is on a similar program being in place in Ireland within 6 months of the bailout. It would give more people more incentive to keep paying the mortgage, ie they'd have some equity in the property, make it possible to move house (currently not possible because lenders won't transfer negative equity even if they'll provide any finance at all), and thereby put a more substantial floor under property values and hence bank losses. It would also have a positive cash flow benefit on households, most of which have suffered wage cuts (if not outright unemployment) and tax rises which have more than eroded the benefits of lower interest rates on mortgage payments. At least some of this cash flow benefit would translate into increased consumer spending, which has fallen off a cliff in Ireland. Without such an increase, Ireland will suffer a Japan-like "lost decade" (or more). Although Ireland is, to some extent, exporting its way out of the crisis, this is never going to be enough to solve it in the absence of any domestic appetite to spend.

    So, Ireland should just get on with taking the EU money, and be grateful that the Germans etc are willing to share the pain of correcting the past decade's over-exuberance.

  • Comment number 77.

    71. At 12:08pm on 18 Nov 2010, RichYork wrote:

    "4. At 10:16am on 18 Nov 2010, Morpheus wrote:

    Is there any sign yet in Ireland that people and buisnesses are asking to pay and to be paid in sterling?
    ---------------
    What a stupid comment. As far as I can see the pound is hovering near its all time low of 1.1 Euro, after it dropped from 1.5 Euro in 2008, losing almost 30% of its value. Don't you remember that your holiday in Euroland has become much more expensive?"

    I'm not sure where this thread started, but this is not stupid - the Irish have been travelling over the border to do their shopping since the start of the crisis (I mean the big crisis, not this latest episode)

    They don't have to go the way of Zimbabwe (adopting a foreign currency as a domestic replacement) - because technically the nation already has 2 currencies.

    The imbalance however will cause yet more problems - this is the problem with a crisis, it's always behaving badly.

  • Comment number 78.

    Its not a bailout.
    Its a loan to keep things going.

    The Irish will be expected to sell off state owned assets, cut public expenditure and raise taxation to pay it back, along with interest.

    In short the Irish people are about to be sacrificed to save the Irish banks.
    Which for the avoidance of doubt is what's going on here and in U.S.

    Its not a bloody bailout, its a transfer of liability.
    Every action being taken, both here and in Ireland is to keep the financial system afloat, not the people.

  • Comment number 79.

    Why are governments in such a crisis and we're having to pay? Because governments are too big, sucking money out of the economy with high taxes, and trying to spend their way out of recession, creating even more problems and larger bills for the taxpayers. In the private sector, non-efficient individuals or money-loosing organisations get the axe. In government, this doesn't happen, and creates more drag and costs from inefficienies. Reduce the size of government, provide benefits for the most needy, lower taxes, and let the private sector steer the economy. They're the one who create wealth, not government!

  • Comment number 80.

    What summary event are these guvts and bureaucrats hoping to stave off?

    YOU CAN'T BORROW YOUR WAY OUT OF DEBT

    They're just buying time, right?

    What comes next?

    GC

    PS - as a small and completely insignificant aside there goes 30% of my sales revenue from Irish Tarmac Rally engine prep.

  • Comment number 81.

    One of the biggest mistakes made with monetary union, is the totalarian nature of having an all embracing single currency for the entire EU /eu zone.

    It would be better if all countries stepped back from the EU and both re-create/trade e.g. in their own currency, in their own domestic market, and then in Euro's elsewhere within the EU zone. This would also give all countries some breathing space and have a reserve currency/EU involvement that fits better as workable with their own currency. This would mean the UK joining the Euro ... but we are already full Euro liability as eu members, effectively, as we have joint liability for everything that happens in the EU, whether we like it or not and as future events will probably demonstrate.

    This will, however, only work if the speculators/hedge funds/spivs are properly regulated ... but would enable a mechanism for those with debts to have another currency alongside the Euro and should be OK wih careful money supply control for management of EU member states own domestic economies.

    Member states would trade in their own currency ... outside of the EU? This should give the faster, stronger economies like Germany some room to manouvre on exports/imports without being restrained on money supply/interest rate issues.

    The alternative, as carry on with what there is coming now in the EU ... is ... mayhem.

    Many, many advantages to this ... not many disadvantages?

    Some urgent EU financial steps back away from catastrophe, would be welcome i.e as making the EU currency ... exactly that ... 'internal EU currency'.

  • Comment number 82.

    69. At 12:00pm on 18 Nov 2010, frmaison wrote:
    What a stupid comment


    Its not a comment. Its a question. The little squiqggley thing at the end of the sentence indicates this.
    Are you on the right blog? ... see thats another question

  • Comment number 83.

    Would it be possible for someone to ask the chancellor what extra austerity measures he plans to cover our commitments to saving the Irish banks .?

    I think we have already thrown an aircraft carrier or so at the problem but it looks to me as though the defence budget for a few years is going to be needed... and thats just for Ireland.....

    Perhaps our bankers would like to chip in with their bonus pool after all we are all in this together......





  • Comment number 84.

    It's interesting to note that while the arch Capitalists are happy to defend their system by claiming that we're all wrong and what we see is not what we see....

    ...they can't explain how the UK is going to get back on it's feet when it's 'cash cow' for the last 20 years (housing equity) is now dead.

    http://www.bbc.co.uk/news/business-11784783

    No answers, no explanations, no solutions - the house prices are beginning to fall - which should be good news for FTBuyers - the life blood of the market - but strangely mortgage approvals are falling - because the banks won't lend.

    ...now if we're in a recovery - and the banks are 'back to making a profit' - why are they not lending to people who have a use for it?

    ...the answer is because the banks know what's coming, it's only the deluded capitalist who will ignore reality by hiding behind a failed ideology. Asset sales and redundancies have produced the banks profits - I would have thought the RBS results last quarter would have made it clear this is all temporary.

    I think Robert knows this - he's just not allowed to say it....

  • Comment number 85.

    Surely there is some doublecounting in this 700 billion figure.

    At least there is a vague and ill-defined attempt to bring the bank directors to account in Ireland - none of course in the UK.

  • Comment number 86.

    ...and here we have the 'capitalists' solution to the problem.

    http://www.guardian.co.uk/business/2010/nov/18/oecd-cuts-uk-economic-growth-forecast

    So it didn't work for Greece, it didn't work for Ireland, why does George Osbourne think it's going to work here?

    You really have to question his intelligence and motives - maybe George actually wants a revolution - because that's what he's creating.

    Luckily for George the majority of the electorate seem to be even more stupid than he is!

  • Comment number 87.

    "7. At 10:25am on 18 Nov 2010, John_from_Hendon wrote:
    PS I do not like this tiny box in which we now have to compose our contributions. It is far easier to write and review that which one has written about complex issues in a bigger window!"
    I agree so we have to get round it. You can always preview before posting of course.
    Write your stuff in a text file on your computer John, then sign in and copy/paste.
    Put a shortcut on your desktop to the document - you don't have to save what you've written when you close it so it can be blank ready for your next pearls.

    Ireland had the benefit of joining but now suffers the bust which GB got rid of. We joined once but got out again expensively.

    Anyone with money in our Post Office should worry as that's also in Ireland. If it all goes wrong is the government really going to bail out depositors as well as wasting billions in Ireland.

  • Comment number 88.

    JayPee - it's not just the irish property market that you need to worry about - Anglo irish has gone global (I posted this yesterday)

    ...anyway, the irish banks - you want to see what they've been up to....

    http://www.bloomberg.com/news/2010-11-17/anglo-irish-bank-to-auction-232-manhattan-apartments-in-foreclosure-sale.html

    "In 2005, Anglo Irish loaned to properties in at least 14 U.S. cities, including Miami, Chicago, Detroit, Los Angeles and Washington, "

    Are these examples of good lending practices? - that's a very wide spread - are you sure you have good enough knowledge to decide whether to lend or not?

    ...wll while the governments talk of bailouts - the asset devaluation continues - you now that new york apartment at auction today? - I think no bidders (if this is accurate)

    http://streeteasy.com/nyc/talk/discussion/23775-rector-square-auction-no-bidders

  • Comment number 89.

    ~75 WOTW - "What's the panic all about? - we must trust in our leaders, we must trust in our leaders, we must trust in our leaders....."

    Quite so quite so! If only we could be sure they knew what they were doing...

    In the main history shows they don't..

    G

  • Comment number 90.

    "because the banks know what's coming"

    Wish I did WOTW - do tell

    GC

  • Comment number 91.

    Indeed Ireland is not the worst culprit. As someone points out here http://mindfulmoney.co.uk/2340/economic-impact/avoid-ireland-for-the-foreseeable-future.html the cash reserves it has gives them far more in the way of flexibility than the likes of Greece. What is more telling is that steps Ireland has taken haven’t been acknowledged the markets and that could continue and cause matters to go from bad to even worse.

  • Comment number 92.

    79 uummm - you do realise that the problem in Ireland at the moment has to do with the Irish Banks not being able to repay the money they lent from international banks.

    It has nothing to do with government debt - it is private debt.

    I begun to wonder if you knew all of this and were pretending not to in an effort to discredit the views you espouse.

  • Comment number 93.

    At various times, the Feds in Washington must have taken a very big sigh and said here we go, we've got to bail out West Virginia (again) or some other State that has got itself into trouble.

    So why should the embryo EU be any different?

    That is, occasionally having to bail-out weaker members of the community and, learning from the experience, tightening the rules.

    This blogger just sees it all as part-and-parcel of the EU's development.

  • Comment number 94.

    78. At 12:22pm on 18 Nov 2010, Dempster wrote:

    "In short the Irish people are about to be sacrificed to save the Irish banks"

    Actually, I think their hand is being forced to save the federalist Euro system/state.

    It is slightly different to the UK as our govt borrowing is usually over longer timescales and so the rapidity of refinancing is less. It is similar to some banks who survived the whiolsesale market freeze as their debt did not all mature at once as was the case of, for example, Northern Rock.

    Debt is manageable if managed correctly, ultimately with a view to paying it off. Some of Eire's debt was, from my understanding, due to mature next year, so one has to wonder why the ECB/Euro are (aka France & Germany) have been so keen for them to be the headlines at the mo.

  • Comment number 95.

    They could always default and go to a barter economy. I calculate that roughly speaking, they could pay off their debts by selling 400 million tonnes of Kerrygold, enough to supply the UK market for 3,200 years.
    Sorted!

  • Comment number 96.

    writingsonthewall.. I must say I have enjoyed your posts this week. You don't need me to tell you your banging your head against a brick wall trying to wake up out of their media fueled ignorance.

    Personally I woke up before the Northern Rock fiasco and could see it coming a mile away, and I am no economist. Ever since we have been throwing good money after bad and have only succeeded in postponing the inevitable economic collapse, all the time fueling the potential social breakdown with ever increasing public anger.

    Death by a thousand cuts, with constant economic paramedics on hand to keep injecting the fiat adrenaline and charging up the defribillator to shock the corpse of capitalism back to life.

    Economic collapse now or next year will be no different to the economic collapse we should have allowed in 2008. With the possible exception, that the people behind the collapse, have larger piles of worthless money to keep the fires burning.

  • Comment number 97.

    The great depression was a necessary correction to intense period of greed and avarice. By trying to avoid it this time by bailing out the banks and passing on the speculators debts to the taxpayer we are merely accelerating the process which will culminate in a greater catastrophe. I could use the analogy of a driver who finds he has entered a corner too fast. He may be able to get out of trouble by pressing the accelerator to hold the line but if that doesn’t cure the problem the crash when it comes will be all the worse.

  • Comment number 98.

    84. At 12:30pm on 18 Nov 2010, writingsonthewall wrote:

    "...now if we're in a recovery - and the banks are 'back to making a profit' - why are they not lending to people who have a use for it?

    ...the answer is because the banks know what's coming, it's only the deluded capitalist who will ignore reality by hiding behind a failed ideology. "

    Or perhaps they do not wish to lend because of the relatively high LTVs required. Perhaps they are being responsible lenders for although the customer might want the same amount of money as before, they no longer have the collateral supporting it. Perhaps you are advocating, through those words, that the banks are not willing to lend to reckless borrowers. Reckless borrowers perhaps because they went chasing the cheapest deal without working out what the cost post deal was and now they find that the money they initially saved and could have used to pay down capital but instead spent on holidays, cars etc was indeed recklessly spent because the bank allowed them the free will to spend the money as the wanted to

    Just a thought

  • Comment number 99.

    25. At 10:52am on 18 Nov 2010, tFoth wrote:
    "when it is all counted it may be enough to bankrupt the Governments"
    39. At 11:06am on 18 Nov 2010, writingsonthewall wrote:
    "If you ran a shop, would you be lending your broke customers money so they could spend it in your shop? How long could this go on for?"
    80. At 12:25pm on 18 Nov 2010, Guy Croft wrote:
    "They're just buying time, right?"
    ====================================================
    All of the above comments make effectively the same point.

    This is beginning to feel like one huge Ponzi scheme ... and it's starting to unwind in just the same way as the Bernard Madoff scandal did. The crisis has seen unmanageable debt percolate up the system from individuals to retail banks, from retail banks to investment banks, from investment banks to national governments ... and now from the smaller countries to the bigger countries. If net debt is more than even the largest economies can handle, there's nowhere else to go other than default and/or devaluation through QE. The ensuing inflationary spiral will wipe out the savings and pensions of the frugal ... ironically, along with the debts of the not so-prudent. Who says crime does not pay?!

  • Comment number 100.

    Are we still talking about Ireland?

    I thought we would be blogging about Portugal's bailout by now!

    One thing is for sure - we are getting quite good at kicking that can down the road...

 

Page 1 of 3

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.